Customers use pre-funded financial transaction cards for a variety of purposes. Pre-funded financial transaction cards (also referred to as “prepaid debit cards”) allow for the flexibility of eliminating use of cash with merchants, coupled with the convenience of ordinary credit card transactions. Pre-funded financial transaction cards also allow the bearer of the card to eliminate the potential for overdrafts as the pre-funded transaction card has a finite amount of funds allocated to the card. Consequently, the bearer will not have to pay interest fees for the card, as the possibility of overdraft does not exist.
While pre-funded transaction cards have many advantages, there are significant drawbacks for the cards. In conventional pre-funded transaction cards, the cards are funded at the time the card is purchased. The pre-funding of the card necessitates that the money pertaining to the card value is contained in an account, ready for usage by the bearer.
For large purchasers of pre-funded financial transaction cards, such as for use as a promotional item, the purchaser must purchase each card at full value. For large purchases, the purchaser must commit significant money to the card issuer. If the promotional item is not used by a potential customer, then the purchaser still has paid for the pre-funded transaction card. The purchaser has spent money on each potential customer, regardless of if the pre-funded transaction card is actually used by the customer.